Donald Trump has officially announced his decision to recognize Jerusalem as the capital of Israel, where he plans to relocate the American embassy. The US President admitted the move will cause dissent, but says it could help resolve the Arab-Israeli conflict.

"Today, we finally acknowledge the obvious - that Jerusalem is Israel's capital. This is nothing more or less than a recognition of reality," said Trump in a pre-scheduled speech at the White House.

"Israel is a sovereign nation with a right like every other sovereign nation to determine its own capital. Acknowledging this is a fact is a necessary condition for achieving peace,” continued the US President, who called Israel “one of the most successful democracies in the world."

The United States will become the only country to host its diplomatic mission in the city, which remains disputed territory, though Trump has ordered for the move to be delayed by six months.

The US President rejected warnings from the Arab world and Europe that the decision would imperil the already-stalled peace process between Palestine and Israel.

"After more than two decades of waivers, we are no closer to a lasting peace agreement between Israel and the Palestinians… We cannot solve our problems by making the same failed assumptions and repeating the same failed strategies of the past," said Trump.

Trump also left the door open for a two-state solution.

"The United States would support a two-state solution if agreed to by both sides. In the meantime, I call on all parties to maintain the status quo at Jerusalem's holy sites including the Temple Mount, also known as Haram al-Sharif."

In a recorded statement released minutes after Trump finished talking, the Israeli Prime Minister Benjamin Netanyahu said that his people would be “forever grateful” for the “historic decision” and urged other countries to follow America’s example.

“Jerusalem has been the focus of our hopes, our dreams, our prayers for three millennia,” said Netanyahu. “The President's decision is an important step towards peace, for there is no peace that doesn't include Jerusalem as the capital of the State of Israel.”

This is a historic day. Jerusalem has been the capital of Israel for nearly 70 years. Jerusalem has been the focus of our hopes, our dreams, our prayers for three millennia. Jerusalem has been the capital of the Jewish people for 3,000 years. Thank you, @realDonaldTrump! 🇮🇱🇺🇸 pic.twitter.com/mWCUpUMpiC

In a televised speech, he said he “condemned and rejected” the US decision, which he said will “serve terrorists” and “bring never-ending wars to the region.”

He insisted that Jerusalem remains the capital of any Palestinian state, and said that the decision would serve to unify all Palestinian factions at a “critical moment,” which he promised to gather for a discussion of the appropriate response.

Hamas, which is control of Gaza, and is regarded as a terrorist organization by the United States, said that Jerusalem’s new status would “open the gates of hell.”

It called upon other actors to “undermine” American interests in the Middle East, and reiterated its promise to stage “three days of rage” in response to Trump’s statement.

“Trump’s decision will not succeed in changing the reality of Jerusalem being Islamic Arab land,” said a spokesman for Hamas, which officially does not recognize Israel’s right to exist.

Earlier Wednesday, Palestine and Jordan requested an emergency Arab League meeting on the issue. The regional organization are set to hold talks Saturday, Reuters reported.

The decision has also been condemned by the EU, Pope Francis, and both, Muslim and Christian religious leaders in Jerusalem itself.